One $billion Investment In Uair

T

Traveler

Guest
Competitive cost structure. Mr Siegel states, this time, that if our costs don’t fall below revenues, we won’t stay in business. Still a mystery, however, is how cost cutting is more a priority than revenue generating. When it comes to fresh ideas, cost cutting is the emphasis. For Siegel, in the equation of running a successful Airline, costs are one of the few variables. In Siegel’s communiqué, the only conclusion you can draw, is that revenue is nearly a fixed constant in the equation and therefore bears little interest to the employees. As a result Siegel makes little comment, or provides little hope to motivate employees in this direction.

Most of the other Network carriers are reporting profits. These carriers have a certain Economic equilibrium in their quasi-symbiotic mutualistic existence in their shared markets with LCCs.

There were some skeptics early on about Delta’s Song, however the critics are rethinking their positions as Delta is reporting better than expected success against the USAir’s, JetBlues, Airtrans and Southwests. United’s working on TED. With a keen grasp of political degree, Northwest and Continental, demanded and obtained a marketing alliance which has proven successful and both are having success with a balanced RJ fleet geared to support their Mainline operations rather than compete with themselves.

USAir... got rid of their woefully under-developed, Low Cost Alternative (Metrojet) as other airlines refine and explore the concept. USAir... gave up the advantages of stage length, and diversified markets necessary to support the Network, Hub and Spoke Business Model. And, contrary to what many believe as true, USAir didn’t place a priority on a broad RJ fleet, as these jets were becoming a new fashion, at the signing of Labor’s previous contract agreements.

Siegel prefers to work from a position of advantage -- A position of strength. BK gave him this advantage as did the threat of Liquidation.

When he doesn't have this advantage, he feels motivated towards reconciliation with lessors, lenders, airport authorities, politicians and labor. An illustration of a perceived disadvantage are his conciliatory phrases. Back then it was, "Best friend labor ever had", "Labor friendly Reorg.". Now it's, “Cooperateâ€, "Defeat the common enemy", "We must not point fingers at each other".

These are indicators that he's lost the advantage for furthering the “Labor Cost†philosophy of Executive Direction and is working on a new strategy which requires time to develop and mature. On the chance his plan might be somewhat dubious, he seeks to avoid reasonable accountability to his employees. Thus the employee confusion over corporate initiatives, substantial goals, growth and an sense of direction. He's seeking a way for the employees to help lash their own ankles and wrists to the chair to insure their struggles will be futile when he ultimately reveals his, thus far, ambiguous plan for the future of the mainline.

With how this is all unfolding, it is a mystery to me, that these Labor Leaders along with the BOD Labor Reps. haven't given Siegel an ultimatum and a deadline (a taste of his own medicine). ---Put forth a credible plan, verifiable by Labor consultants. ---Show how this Executive team has the versatility to deal with a rapidly evolving competitive industry and the potential for declining yields. ---Prove, within economic reason, the plan will acquire a greater market share at our core and edge out competitors in diversified markets. ---Prove the plan is sustainable without risk to liquidity, added economic employee concessions or the potential of falling back into BK.

Essentially examine, in detail, how far we've come with this plan since BK, how this Team has dealt with the evolving challenges and how viable the plan is going forward.

If these and other (I'm sure, more appropriate) criteria aren't met within the next 30 days? The employees take it a grand step farther than just taking a position of no-confidence in this Executive Team. Mr Siegel does not hesitate when evaluating Labor. He acts without prejudice or emotion. He takes Critical analysis of the employee’s worth, the cost of the employee’s Health-Benefit coverage and the cost-effectiveness of keeping certain employees on the payroll. We should flatter Mr Siegel and emulate such critical objectivity with respect to contributions he and his team might offer the Corporation.

Should Management be Accountable to Labor? Beside the Board seats and Partial equity in the company – yes.

Labor is investing more than a $Billion annually in this Executive Team. That kind of investment demands accountability. Would RSA expect less? Would RSA invest $Billion more each year without this accountability. I'm afraid we don't really understand, with the right perspective, exactly what our role or identity is in this company.

No other entity is giving a $Billion a year to this company. Post 911, no other Airline of this scale has obtained an equally proportionate sacrifice from labor. Nor has Management matched, in proportion to labor, the same scale of total Executive Concession. Management encourages a mindset that Labor has invested $Billion a year to sustain minimal assurances of compensation and of job security. Beyond this, Management doesn’t want labor to expect any return on it’s investment.

Would RSA tolerate a minimal return on investment to exclude the opportunity for growth and prosperity. Would RSA seriously invest in UAIR if they didn’t anticipate a return on investment. Since the Executive Team, which has sacrificed less and has less to lose except their bruised ego; Should they anticipate disproportional profit from the employee’s $Billion annual investment? Is it appropriate that the Employees view their $Billion annual investment as money lost? Or, Should the employees adopt the traditional reality of economics, finance and profit? Without a doubt, the employees of this airline should more appropriately adjust their mindset that this $Billion a year investment is an investment for their futures. It is an investment for their growth, success and prosperity. There is no rational that this should be exclusively the rule of corporate raiders and elite entrepreneurs. The mindset labor should have is that this annual investment comes either at a cost or a potential share in the profit. Either way, this investment comes with the burden of accountability by Management.

With this annual investment, there should be no mystery as to the viability of Siegel's Plan. There should be no lack of faith in his Team. There should be no lack of accountability. But... there is.

The way I see it, we're still coming along for the ride. That's wrong. We should recognize two things: 1) we (employees) are not smart enough to own or run an Airline. 2) We (employees) are smart enough to know there are better Executive Teams out there, who have the potential of both motivating the employees in a cooperative effort through respect and dignity; And who have a keen understanding that this Corporate Model of a network carrier is unsustainable without growth and diversification of markets, given the challenges of the LCC.

Unlike other Legacy Airlines, we don't have the network to support a direct challenge to our core markets. Has Delta achieved economic and market equilibrium with a low cost competitor in their back yard? Does Delta have the diversity and stage length to support their Hub and Spoke Business Model? Is it this diversity and logic of Corporate response which has successfully discouraged JetBlue in Atlanta, despite Delta’s higher Labor costs?

Yet, USAirways’ stated focus is to become a superior regional. There is no plan from this Executive Team which answers the question on everyone's mind. How does the inefficiencies of a Hub and Spoke, Network carrier compete with the economic efficiencies and advantages of a LCC, Point to Point Competitor, if it is our Strategic Plan to set a self imposed limitation on growth and diversification as we limit the arena of competition to our Core Markets?

If the answer is, as Management once again suggested in Siegel's weekly message,-- Cost Structure (Employee Concessions). Then we must agree, there is a finger pointing and this finger is still pointing in the wrong direction. Once again, asking labor to cooperate and help by pointing our own fingers at ourselves while superficial conciliations and ambiguous answers to a viable plan are somewhere in the works is merely a delay until the next crisis evolves which empowers Management with a new advantage to seek substantial unilateral labor costs and job cuts – this, the only marketing and economic reality understood by Siegel. A reality, we don’t wish to share again with him.

The Labor Leaders should understand that this Executive Team is accountable to them. Without labor cooperation, this Team is ineffective. Labor must set a reasonable deadline and have an ultimatum. Management should define a clear plan for success. Is an annual $Billion investment worth this kind of accountability?
 
Great Idea traveler, only a small point. We as employees were forgoing future potential earnings with concessions. Unlike RSA which applied real $ at the table. Future dollars are naturally discounted. "I will gladly pay you Tuesday for a hamburger today. . . ."

I hope that my representatives continue to raise the pressure.
 
Traveler, email your comments to Dave again so we can read his response, his mantra "give me jetblue's labor conract and seniority" once more just for old time's sake.

Seriously, you nailed it. No one has been attempting what USAir has steadfastly attempted for 13 years and continues to dogmatically and obstinatley pursue against all evidence to the contrary. You don't cram a mature, full service, legacy-carrier style airline into a short-haul hub-and-spoke model with a core route system the size of Utah. The results of 13 years are a sufficient sample-size - it's a failure. Yet management insists on hanging on to the bitter end, all the while pining away for jetBlue's labor contracts which wouldn't make a difference anyway because of the failed USAir business model they'd be forced to operate under.
 
diogenes said:
Traveler,

Excellent!

I just love when the truth is subversive! ;)
ATTENTION: HAWK/FLYONTHEWALL/CCY and all other management team talking heads....this proves your PM's to me were dead wrong. Dave is NOT the man up to the job and he needs replaced ASAP while there is still a chance for U's future. Your PM's telling me Dave saved this company and is our only hope, well I guess other posters on here have missed that point. Better PM them real fast and straighten them out!
 
Mr. Siegel didn't save doodley. The employees, governement aid and the loyalty of passengers Mr. Siegel and Mr. Baldanza have failed to shake off of us are what have saved the company so far.

Management has dug a pretty deep hole for this company over the years (Siegel and Wolf in particular), so it remains to be seen whether the rest of us will be able to haul ourselves out of that hole, but it sure is hard to make headway when you've got the devil dancing on your back.

In solidarity,
Airlineorphan
 
What amazes me about this latest "concession talk" from management is they are spinning the usual "doom and gloom " knowing full well that this airline is not expected to make a profit until late 04 or early 05.. Siegel has pumped a ton of money into "RJ's" that this airline has yet to recieve.. [Not even to mention MDA]. I believe Siegle and Friends are using this 3rd quarter loss as an opportunity to "Create a Crisis" knowing full well this airline is not yet in position to produce a profit..
 
insp89,

You hit it right on. They are using the third quarter to get what they can. It will be their only opportunity. Prepare for the threats in early 2004.
 
Very good post....my coworkers and I were just talking today how
all the accountability is only enforced at the lower levels.
Managment makes a huge mistake thinking revenues would somehow
bounce back to pre 911 levels, and yet no one in management will accept
responsibility for this error.
Management has access to sales daily, weekly and monthly. I cannot
believe they didn't know the third quarter was going to be a disaster.

It is very disheartening to look at our losses and see that NW and CO are
on the road to recovery. The employees are working hard and deserve
better.